ex106_071108.htm


     

     

    
      

      

    

    Exhibit
10.6

     

     

     

     

    SUB-SUBLEASE

     

    THIS SUB-SUBLEASE is made and entered
into July 7, 2008, to be effective as of July 5, 2008, 11:59 P.M., Mountain
Daylight Time, between FRANKLIN COVEY CO., a Utah corporation (“FCC”), and
FRANKLIN COVEY PRODUCTS, LLC, a Utah limited liability company (“FC
Products”).

     

    RECITALS:

     

    A. Cole ED
Salt Lake City UT, LLC, a Delaware limited liability company (“Landlord”), and
EDS Information Services L.L.C., a Delaware limited liability company
(“Sublandlord”), are parties to that certain Lease Agreement, entered into as of
June 30, 2001, for the lease of certain real property and improvements located
generally at 2620 and 2580 South Decker Lake Boulevard, Salt Lake City, Utah and
more particularly described therein (the “Premises”), which Lease Agreement was
amended by that certain First Modification of Lease Agreement effective as of
July 30, 2001, and later amended by that certain Second Modification of Lease
Agreement effective as of August 7, 2001 (collectively, the Lease Agreement and
subsequent amendments shall be referred to as the “Master Lease”), a copy of
which Master Lease is attached as Exhibit
A.

     

    B. Sublandlord
and FCC entered into that certain Standard Sublease Agreement on June 30, 2001,
as amended by that certain First Amendment to Standard Sublease Agreement,
entered into in March of 2007 and made effective February 1, 2007 (as so
amended, the “Sublease”), pursuant to which FCC subleases approximately 152,655
rentable square feet of the Premises as more particularly described in the
Sublease (the “Subleased Premises”).  A copy of the Sublease is
attached as Exhibit
B.

     

    C. FCC
desires to sub-sublease a portion of the Premises to FC Products, and FC
Products desires to sub-sublease a portion of the Subleased Premises from
FCC.  The sub-subleased portion shall be comprised of approximately
96,255 rentable square feet as depicted on attached as Exhibit C (the
“Sub-subleased Premises”).

     

    D.           This
Sub-sublease has been executed and delivered pursuant to the Master Asset
Purchase Agreement dated May 22, 2008 among FCC and the other Selling Companies
identified therein and FC Products, as amended (the “Purchase
Agreement”).  Capitalized terms used but not defined herein have the
meanings ascribed to them in the Purchase Agreement.

     

    Upon the terms and conditions
hereinafter set forth, FCC and FC Products agree as follows:

     

    AGREEMENT

     

    1. Lease of Sub-subleased
Premises.  FCC leases to FC Products, and FC Products leases
from FCC, the Sub-subleased Premises, together with the right in common with
others to use any portions of the Common Areas (as defined
below).  The Sub-subleased Premises is leased by FC Products in its
“as-is, where is” condition, without warranty by FCC of any kind, except as
otherwise expressly set forth herein.  “Common Areas” means areas
designated for non-exclusive use between FCC and FC Products, as further
depicted and identified in Exhibit C, and those
interior and exterior common and public areas, including without limitation,
any

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    corridors,
elevator lobbies, ground floor lobbies, vestibules, service and freight areas,
restrooms, elevator and mechanical rooms, telephone and electrical closets,
parking facilities, and other similar facilities provided for the benefit of all
tenants of the Premises, visitors to the Premises, or other tenants and
occupants, and their employees, agents and invitees.  FC Products’
access to and use of the Common Areas is expressly conditioned upon the
continuation of FCC’s rights to such Common Areas pursuant to the terms of the
Master Lease and the Sublease.

     

    2. Term.  The
term of this Sub-sublease shall commence on the date of closing of the
transaction contemplated under the Purchase Agreement (the “Commencement Date”)
and shall expire on June 30, 2016 (the “Expiration Date”).

     

    3. Rent.  FC
Products shall pay to FCC base rent (“Base Rent”) for the Sub-subleased Premises
in accordance with the rent schedule attached as Exhibit
D.  Base Rent shall be due and payable on the last day of each
month (payable in arrears) during the entire term of this Sub-sublease, without
invoice, demand, deduction or offset.  Rent (defined below) shall be
paid to FCC at the address set forth in Section 12 hereof or at such other
address and/or to such other party as FCC may from time to time elect by giving
not less than ten (10) days advance written notice thereof to FC
Products.  The Base Rent, together with the following, shall be
considered “Rent” hereunder:

     

    A. Utilities.  FC
Products shall pay its Proportionate Share (defined below) of any utilities
serving the Sub-subleased Premises and not separately metered to the
Sub-subleased Premises.  As used in this Sub-sublease, the term
“Proportionate Share” shall mean and refer to a fraction, the numerator which is
the total number of the rentable square feet of the Sub-subleased Premises and
the denominator which is the total number of rentable square feet of the
Subleased Premises; it being agreed that the rentable square footage of the
Sub-subleased Premises is 96,255, and the rentable square footage of the
Subleased Premises is 152,655; and that FC Products’ Proportionate Share is
therefore sixty-three percent (63%).  Notwithstanding the foregoing,
FC Products shall benefit from a utility subsidy as reflected on current
financial statements; therefore, all utility payments and any other payments
based on a proportionate share shall, during the Subsidized Period (defined
below), be calculated on a Sub-subleased Premises area of 82,393 rentable square
feet, for a subsidized proportionate share of Fifty-four Percent (54%) (the
“Subsidized Proportionate Share”).  For the purposes of this
Sub-sublease, the “Subsidized Period” is the period of time between the
Commencement Date and any transfer of FC Products’ ownership (including a
merger, consolidation or change in control with through or by a third-party
unaffiliated entity of FC Products) or assignment of this Sub-sublease or
further subletting of the Sub-subleased Premises other than a Permitted
Assignment (as defined below).  FC Products shall pay any utilities
separately metered to the Sub-subleased Premises directly to the utility
provider.  Each month FCC shall prepare and submit to FC Products (i)
an invoice identifying FC Products’ Subsidized Proportionate Share, or
Proportionate Share, as the case may be, for any utilities incurred serving the
Sub-subleased Premises which have not yet been paid, and (ii) reasonable back-up
documentation pertaining to the charge(s) identified in the invoice (e.g.,
copies of billing statements or invoices from the utility provider), to the
extent it has received the same from the service provider, Sublandlord, or
Master Landlord, or such back-up documentation in its possession or subject to
its control.  FCC’s failure to

     


    
      
         


      

      
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    provide
back-up documentation shall not relieve FC Products of its obligation to make
any payment under this Sub-sublease if FCC has provided evidence that it made a
payment to Sublandlord, Master Landlord, or a third party service provider for
utility services that directly benefited FC Products in whole or in
part.  In the event that FC Products inquires regarding back-up
documentation, FCC shall cooperate with FC Products in locating and obtaining
such back-up documentation from any third-parties who may possess or control
such documentation.  FC Products shall pay the amount identified in
such conforming invoices to FCC in full within twenty (20) days after the
receipt thereof.

     

    B. Operating
Expenses.  In addition to those utility charges provided for
above, and garbage and recycling charges provided for below, beginning on the
fourth anniversary of the Commencement Date, FC Products shall be responsible
for Operating Expenses (as defined in the Master Lease) as follows:

     

    
      	
              Calendar
      Year

            	
              Operating
      Expenses Per Square Foot

            
	
              2008

            	
              $0

            
	
              2009

            	
              $0

            
	
              2010

            	
              $0

            
	
              2011

            	
              $0.50

            
	
              2012

            	
              $1.00

            
	
              2013

            	
              $1.50

            
	
              2014

            	
              $2.00

            
	
              2015

            	
              $2.00

            
	
              2016

            	
              $2.00

            


    

    


    Within
sixty (60) days after the end of each calendar year for which Operating Expenses
are to be paid, FCC shall provide a statement to FC Products showing the actual
cost of the Operating Expenses incurred by FCC and reasonable documentation
evidencing the same.  FCC shall remit the difference between the
amount actually paid by FC Products during the prior calendar year and the
actual Operating Expenses incurred by FCC based on FC Products’ Subsidized
Proportionate Share (if during the Subsidized Period), or based on FC Products’
Proportionate Share (if after the Subsidized Period) within thirty (30) days
after delivery of such statement and documentation.  Notwithstanding
anything herein to the contrary, as used in this Sub-sublease, Operating
Expenses shall not include any utilities that are the subject of subsection A
above, and shall consist only of Operating Expenses which FCC incurs as its
Proportionate Share of Operating Expenses under the Sublease.  Under
no circumstances shall FC Products be responsible for any Operating Expenses in
excess of the amounts set forth in the foregoing table.

    


    C.           Garbage and
Recycling.  FC Products shall pay its Subsidized Proportionate
Share of the cost of all garbage and recycling services incurred by FCC during
the Subsidized Period, and shall pay its Proportionate Share of such costs after
the Subsidized Period.  FCC shall deliver copies of all garbage and
recycling service invoices to FC Products, and FC Products shall remit payment
for its Proportionate Share of the


    
      
         


      

      
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    same
within twenty (20) days after its receipt of such invoice.  FCC shall
have the right to all income resulting from recycling that occurs from the
printing operations located on the Sub-subleased Premises and FC Products shall
have the right to all income resulting from recycling that occurs from the
warehouse operations located on the Sub-subleased Premises.  The
parties shall use their best efforts to fairly determine the apportionment of
the recycling income in accordance with the foregoing, and shall further make
arrangements for timely payments to each other in the event that one party is
collecting recycling income that belongs to the other.

    


    D.           Real Estate
Taxes.  FC Products shall pay its Subsidized Proportionate
Share of any Real Estate Taxes (as that term is defined in the Master Lease)
during the Subsidized Period and shall pay its Proportionate Share of Real
Estate Taxes after the Subsidized Period.  Notwithstanding anything
herein to the contrary, as used in this Sub-sublease, Real Estate Taxes shall
consist only of Real Estate Taxes which FCC incurs as its proportionate share of
Real Estate Taxes under the Sublease.  Each month FCC shall prepare
and submit to FC Products (i) an invoice identifying FC Products’ Subsidized
Proportionate Share, or Proportionate Share, as the case may be, for any Real
Estate Taxes pertaining to the Sub-subleased Premises, and (ii) reasonable
back-up documentation pertaining to the charge(s) identified in the invoice, to
the extent it has received the same from Sublandlord, or Master Landlord, or
such back-up documentation is in its possession or subject to its
control.  In the event that FC Products inquires regarding back-up
documentation, FCC shall cooperate with FC Products in locating and obtaining
such back-up documentation from any third-parties who may possess or control
such documentation.  FCC’s failure to provide back-up documentation
shall not relieve FC Products of its obligation to make any payment under this
Sub-sublease if FCC has provided evidence that it made a payment to Sublandlord,
Master Landlord, or to the relevant taxing authority and the payment directly
benefited FC Products in whole or in part.  FC Products shall pay the
amount identified in such conforming invoices to FCC in full within twenty (20)
days after the receipt thereof.

    


    4. Permitted
Use.  FC Products may use the Sub-subleased Premises for the
purpose for which it is currently being used as of the date of this
Sub-sublease, including without limitation, the operation of printing presses
and operations related thereto, general business use, and storage
space.  Except as provided in the foregoing sentence, FC Products
agrees that the Sub-subleased Premises shall not be used for any other purpose
whatsoever without the prior consent of FCC, Sublandlord and Landlord, and that
it will not use the Sub-subleased Premises or permit the Sub-subleased Premises
or any part of the Building (as defined in the Sublease) of which it is a part,
to be used in violation of any of the terms, covenants or conditions of the
Sublease or the Master Lease.

     

    5. Assignment.  FC
Products may assign this Sub-sublease or sublet all or a portion of the
Sub-subleased Premises without the prior written consent of FCC in the following
instances: (i) the assignment or sublease is to an affiliate or subsidiary of FC
Products; (ii) the assignment or sublease occurs jointly and concurrently with
or to the same assignee or affiliate of the assignee under or in connection with
that certain Master License Agreement dated as of the Commencement Date, to
which FC Products and FCC are parties (the “Master License Agreement”), and such
assignee or sublessee expressly agrees in writing to assume all of
the

     


    
      
         


      

      
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    obligations
of FC Products hereunder; or (iii) FC Products has obtained the consent of
Master Landlord and Sublandlord to a sublease of all or a portion of the
Premises.  Notwithstanding that Sublandlord’s consent is not required
for transfers pursuant to clauses (i)-(iii) above, each such assignment or
sublease shall only be made upon the obtaining of the prior written consent of
Master Landlord as required in connection with the Master Lease, and Sublandlord
as required in connection with the Sublease (and FCC agrees to cooperate to
obtain such consents, if required, from Landlord).  Except as provided
in the foregoing sentence, FC Products shall not, and shall not have the right
to, assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, by operation of law or otherwise, this
Sub-sublease or any of its rights or obligations under this Sub-sublease without
the prior written consent of FCC, which consent shall not be unreasonably
withheld, conditioned, or delayed.  FC Products and FCC acknowledge
and agree that FC Products is not obligated to pay Base Rent for 13,862 square
feet of the rentable square footage of the Sub-subleased Premises (as further
described in the attached Exhibit
E).  Except as provided in (i) of this Section 5, if FC
Products assigns or subleases any portion of the Sub-subleased Premises, whether
in conformity with the provisions of Section 15 of the Sublease or not, all rent
subsidies set forth on Exhibit E, in
addition to the utility subsidy described above and any other subsidies
benefiting FC Products, shall automatically terminate, and FC Products shall be
fully liable for the Base Rent applicable to the 13,862 square feet as such rent
amount is specified in Exhibit E, from and
after the effective date of such sublease or assignment.  FCC may
collect rent from any assignee or subtenant of FC Products without waiving any
remedies it may have in the event FC Products has violated this Section
5.

     

    6. Compliance with Master Lease
and Sublease.  FC Products and FCC agree to keep and perform
promptly each of the terms, covenants and conditions of the Master Lease
relating to the Sub-subleased Premises, except as otherwise set forth herein,
including without limitation the obligation to pay Rent, which is governed by
this Sub-sublease.

     

    7. Termination; Trade
Fixtures.  Without the further act or deed of Landlord,
Sublandlord, or of either party hereto, the term of this Sub-sublease shall
terminate and be of no further force or effect on the Expiration Date, and upon
such termination FC Products shall forthwith vacate the Sub-subleased Premises
leaving it in the same condition as it was received upon occupancy or such
better condition which, under the terms of the Master Lease or the Sublease, as
the case may be, Sublandlord or FCC is obligated to leave the
same.  Notwithstanding anything herein to the contrary, and Trade
Fixtures shall be the sole property of FC Products and FC Products shall be
entitled to keep such Trade Fixtures.  As used herein, “Trade
Fixtures” shall mean and refer to any property located within the Sub-subleased
Premises or in the future placed on the Sub-subleased Premises by FC Products or
its agents for the purpose of the conduct of FC Products’ business.

     

    8. Notice of
Default.  FC Products will notify Landlord and Sublandlord
forthwith in the event of any default of FCC that occurs under the provisions of
this Sub-sublease which comes to the attention of FC Products, such notice to be
given to the Landlord and Sublandlord by United States Mail, registered or
certified, postage prepaid, at the addresses provided below, or such other
address as may be provided to FC Products in writing from time to
time.

     


    
      
         


      

      
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    9. Notice.  Any
notice provided for herein shall be deemed to be duly given if made in writing
and delivered in person to an office of such party, by nationally recognized
over-night courier or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:

     

    If to FCC:

     

    Franklin Covey Co.

    2200 W. Parkway Boulevard

    Salt Lake City,
UT  84119

    Attn:  Legal
Department

     

    If to FC Products:

     

    FC Products

    2250 W. Parkway Boulevard

    Salt Lake City,
UT  84119

    Attn:  Sarah
Merz

    


    If to Sublandlord:

    


    EDS Information Services,
L.L.C.

    5400 Legacy Drive,
H3-2F-53

    Plano, Texas 75024-3105

    Attn:  Real Estate
Leasing

    


    If to Landlord:

    


    Cole  ED Salt Lake City UT,
LLC

    2555 East Camelback Road, Suite
400

    Phoenix, AZ 85016

    


    or to
such other address with respect to either party hereto as such party shall
notify the other party hereto in writing.  Any notice so given, if
mailed as aforesaid, shall be deemed received the second (2nd) business day
after it is deposited in the United States Mail.

     

    10. Indemnifications.

     

    A.           Indemnity of FC
Products.  FC Products shall indemnify, defend with counsel
reasonably acceptable to FCC, and hold FCC, and its officers, directors,
employees and agents, harmless from and against any and all liabilities,
penalties, losses, damages, costs and expenses, demands, causes of action,
claims or judgments (including, without limitation, attorneys’ fees and
expenses) (collectively referred to as the “Claims”) arising, claimed or
incurred against or by FCC, or its officers, directors, employees or agents,
from any matter or thing arising from (i) the use or occupancy of the
Sub-subleased Premises by FC Products or any of its partners, employees, agents,
licensees and invitees, the conduct of FC Products’ business, or from any
activity, work or other thing done, permitted or suffered by FC Products in or
about the Sub-subleased Premises; (ii) any accident, injury to or death of FC
Products or its partners,

     


    
      
         


      

      
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    employees,
agents, invitees or licensees or any other person or loss of or damage to
property of FC Products or any such persons occurring on or about the
Sub-subleased Premises or any part thereof during the term hereof; or (iii) any
breach or default in the performance of any obligation on FC Products’ part or
to be performed under the terms of this Sublease.  FC Products shall
have no obligation to indemnify, defend or hold FCC harmless from and against
any Claims resulting solely from FCC’s breach of this Sub-sublease or from the
negligence or willful misconduct of FCC.  FC Products shall give
prompt notice to FCC in case of casualty or accidents known to FC Products on or
about the Sub-subleased Premises.

     

    B.           Indemnity of
FCC.  FCC shall indemnify, defend with counsel reasonably
acceptable to FC Products, and hold FC Products, and its officers, directors,
employees and agents, harmless from and against any and all Claims arising,
claimed or incurred against or by FC Products, or its officers, directors,
employees or agents, from any matter or thing arising from any breach or default
in the performance of any obligation on FCC’s part or to be performed under the
terms of this Sub-sublease, the Sublease or the Master Lease.  FCC
shall have no obligation to indemnify, defend and hold FC Products harmless from
and against any Claims resulting solely from FC Products’ breach of this
Sub-sublease or from the negligence or willful misconduct of FC
Products.

     

    C.           Survival of
Indemnities.  Notwithstanding any provision hereof to the
contrary, the indemnifications provided in this section shall survive any
termination of this Sub-sublease or expiration of the Term hereof.

     

    11. Insurance.  Without
limiting the generality of Section 6 hereof, FC Products shall procure and
maintain the insurance required under Section 16 of the Sublease, naming FCC,
Sublandlord and Landlord as additional insureds.  No policy of
insurance obtained by FC Products under the provisions of Section 11 may be
canceled or terminated except upon not less than twenty (20) days written notice
to FCC, Sublandlord and Landlord, and each policy shall contain a provision to
that effect that the rights of FCC, Sublandlord and Landlord thereunder will not
be affected by any defense which the insurer may have against FC Products or any
other party.  Certificates of each policy of insurance, and renewals
thereof obtained by FC Products shall be promptly delivered to FCC, Sublandlord
and Landlord.

     

    12. Representations and
Warranties.

     

    A. FCC Representations and
Warranties.  FCC represents and warrants to FC Products that,
to its knowledge and as of the Commencement Date: (i) a true and correct copy of
the Master Lease and Sublease are attached as Exhibits A and B respectively, and
that there are no other agreements, letter agreements, side agreements,
amendments, modifications, waivers, writings or other matters amending,
modifying, waiving, changing or otherwise affecting the Sub-sublease or any term
or provision thereof; (ii) the Master Lease and Sublease are, as of the date of
this Sub-sublease, in full force and effect; (iii) any information provided
regarding actual or estimated Operating Expenses or that has been provided or
delivered to FC Products is true and accurate and does not fail to disclose any
material fact relating to the Operating Expenses; (iv) as of the date of this
Sub-sublease, there exists no event of default, breach or infraction of any
obligations set forth in the Master Lease or the Sublease; (v) except as
otherwise disclosed in writing to

     


    
      
         


      

      
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    FC
Products, FCC has not received any written notice from a governmental entity of
a claim that the Building or the Common Areas do not comply with all laws
applicable thereto; (vi) FCC is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, with all
requisite power and authority to enter into and carry out its obligations under
this Sub-sublease and such other agreements and instruments to be executed and
delivered by FCC in connection herewith; (vii) each officer who executes this
Sub-sublease and such other agreements and instruments has been duly authorized
to so act by all requisite action on its part; (viii) FCC has not created any
mortgages, trust deeds or contracts for sale that encumber the leasehold
interests in the Premises (including the Sub-subleased Premises) other than
those that have been disclosed in writing to FC Products; and (ix) no
proceedings are presently pending or, to the knowledge of FCC, threatened, for
the taking by exercise of the power of eminent domain, or in any other manner
for a public or quasi-public purpose, of all or any part of the Building or the
Property (as that term is defined in the Sublease).

     

    B. FC Products Representations and
Warranties.  FC Products represents and warrants to FCC that
(i) it is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, with all requisite power and authority
to enter into and carry out its obligations under this Sub-sublease and such
other agreements and instruments to be executed and delivered by FC Products in
connection herewith; and (ii) each officer who executes this Sub-sublease and
such other agreements and instruments has been duly authorized to so act by all
requisite action on its part.

     

    C.           Duration of Representations and
Warranties.  The representations andwarranties provided for in
this Section 12 shall not expire prior to the termination of
thisSub-sublease.

    


    13. Compliance with Terms of
Master Lease and Sublease.  Except as otherwise provided
herein, this Sub-sublease is subject to all the terms of the Master Lease and
Sublease.  FCC and FC Products acknowledge and agree that FC Products
shall, to the fullest extent possible, be entitled to the rights, benefits and
protections afforded to FCC under the Sublease, notwithstanding the failure of
FCC and FC Products to enumerate in this Sub-sublease all of the obligations,
rights, benefits and protections and to specifically allocate as between
Sublandlord and Subtenant such obligations, rights, benefits and
protections.  FCC covenants and agrees that it shall: (i) promptly and
completely fulfill all of its obligations to Sublandlord under the Sublease;
(ii) use commercially reasonable efforts to cause Sublandlord, under the
Sublease, to perform all of the obligations of Sublandlord thereunder to the
extent the obligations apply to the Sub-subleased Premises and FC Products’ use
thereof and of the Common Areas; and (iii) in the event of any default or
failure by Sublandlord to perform its obligations as contemplated by the
immediately preceding subparagraph (ii), FCC shall, upon notice from FC
Products, make demand upon Sublandlord to perform its obligations under the
Sublease, and take timely and appropriate legal action to enforce the
obligations of the Sublease as to which any such default or failure exists, but
shall have no obligation to commence litigation.  To the extent of any
conflict between this Sub-sublease and the Master Lease and/or the Sublease, as
between FC Products and FCC, this Sub-sublease shall control.

     


    
      
         


      

      
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    14. Quiet
Enjoyment.  Subject to FCC’s receipt of the required consents
from Landlord and Sublandlord, FCC covenants and agrees with FC Products that
upon FC Products’ paying the Rent pursuant to this Sub-sublease and observing
and performing all of the other obligations, terms, covenants and conditions of
this Sub-sublease on FC Products’ part to be observed and performed, FC Products
may peaceably and quietly enjoy the Subleased Premises during the term of this
Lease.  Each party covenants and agrees that it shall not do anything
which would constitute a default under the Master Lease or the Sublease, or
would cause the Master Lease or the Sublease to be canceled, terminated or
forfeited by virtue of any rights of cancellation, termination, or forfeiture
reserved or vested in Landlord or Sublandord under the Master Lease and the
Sublease respectively.

     

    15. No Amendment to Master Lease
or Sublease.  FCC covenants that it will not, without FC
Products’ prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, (i) amend the Master Lease or Sublease in a
manner that will increase or alter (to the detriment of FC Products) FC
Products’ obligations or decrease or materially impair FC Products’ rights under
the Sublease, or (ii) voluntarily terminate the Master Lease or
Sublease.

     

    16. Entrance onto Sub-subleased
Premises.  FCC, Sublandlord and Landlord, may enter upon the
Sub-subleased Premises in accordance with the entry and/or inspection provisions
of the Master Lease and Sublease.  FCC shall further have the right to
enter upon the Sub-subleased Premises at any time to cure any default under the
Master Lease or the Sublease, where such default is being caused by FC Products
and FC Products is not otherwise entitled to a cure period as provided for in
Section 17 below.

     

    17. Default.

     

    A.           Default by FC Products;
Remedies.  In addition to those specific defaults listed below,
any failure by FC Products to comply with the terms and provisions of the
Sublease, the Master Lease or any provision of this Sublease shall be a default
hereunder; provided, however, that if the Sublease or Master Lease provides for
a notice and cure period, then notwithstanding any provision herein to the
contrary, FC Products shall not be deemed to be in default if it has not first
been given written notice specifying the alleged default, including the
provision hereof violated, and a reasonable opportunity to cure such default
(such reasonable period not to exceed the time period for cure provided in the
Sublease, less five (5) days).  Upon prior written notice and a
reasonable opportunity to cure (which shall be deemed to be twenty (20) days,
(unless such cure would
reasonably require more than twenty (20) days, in which event the cure period
shall extend to the date that would be reasonably required to cure such default,
but in no event in excess of forty-five (45) days, so long as FC Products is in
diligent pursuit of a cure), and in conformity with the
foregoing sentence, if FC Products defaults in the observance or performance of
any of FC Products’ covenants, agreements or obligations hereunder wherein the
default can be cured by the expenditure of money, either FCC, Sublandlord or
Landlord may, but without obligation to do so, and without waiving any other
remedies which they may have by reason of such default, cure the default, and
charge the reasonable cost thereof to FC Products and FC Products shall pay the
same forthwith upon demand, together with interest at the lesser of the rate of
10% per annum or the highest permissible rate allowed in the State
of

     


    
      
         


      

      
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    Utah.  In
addition to those specific defaults in the Master Lease and Sublease, the
following shall be considered events of default, subject to a right to cure as
provided in the foregoing sentence: (i) FC Products shall default in the payment
of any installment of Rent (FC Products shall pay Rent within five (5) days
after the date that the Rent is due or FC Products shall be deemed in default)
or in the observance or performance of any of FC Products’ covenants, agreements
or obligations hereunder; (ii) any proceeding is commenced by or against FC
Products for the purpose of subjecting the assets of FC Products to any law
relating to bankruptcy or insolvency or for an appointment of a receiver of FC
Products or of any of FC Products’ assets; or (iii) if FC Products makes a
general assignment of FC Products’ assets for the benefit of
creditors.  FC Products expressly waives the service of any notice in
writing of intention to re-enter as aforesaid and also all right of restoration
to possession of the Sub-subleased Premises after re-entry or after judgment for
possession thereof.  In any event of default, FCC may re-enter
immediately into the Sub-subleased Premises and remove all persons and property
therefrom, and at its option, nullify and cancel this Sub-sublease with respect
to all future rights of FC Products and have, regain, repossess and enjoy the
Sub-subleased Premises.  In the case of any such termination, FC
Products will indemnify FCC against all loss of rents and other damages which it
may incur by reason of such termination (provided, however, that FC Products
shall not be liable for any special, consequential or incidental damages), and
also against all reasonable attorneys’ fees and expenses incurred in enforcing
any of the terms of this Sub-sublease.

     

    B.           Default by FCC;
Remedies.  FCC’s
failure to perform any of its covenants, agreements or obligations hereunder or
under the Sublease or Master Lease within twenty (20) days after receipt of
written notice thereof from FC Products shall be deemed an event of default of
FCC (unless such cure would reasonably require more than twenty (20)
days, in which event the cure period shall extend to the date that would be
reasonably required to cure such default, but in no event in excess of
forty-five (45) days, so long as FCC is in diligent pursuit of a cure).  If such default is
reasonably expected to take more than twenty (20) days to cure, FCC must
diligently proceed to cure the default through
completion.  Notwithstanding anything herein to the contrary, if FCC
does not cure or commence to cure a default as provided in this subsection, or
if an emergency situation arises that would cause substantial harm or injury to
FC Products or FC Products’ business operations, then in any of the foregoing
instances, FC Products shall have the right to remedy such emergency situation
or cure such default.  Any expenses incurred by FC Products in
effecting such a cure shall be paid by FCC within thirty (30) days of receipt of
demand therefor, together with documentation evidencing such expenses, provided
such documentation is adequate to evidence such expenses to the reasonable
satisfaction of FCC.  This subsection shall not limit any
rights or remedies available to FC Products at law or in
equity.

     

    18. Mediation.  The
parties shall attempt in good faith to resolve any dispute or claim arising out
of or relating to this Sublease promptly by confidential mediation under the CPR
Mediation Procedure in effect on the Commencement Date, before resorting to
litigation.  If such dispute or claim is not settled by the parties
through mediation within forty-five (45) days after the first meeting of the
parties with the mediator to discuss the matter, or if the parties agree to
terminate mediation sooner, then either party may initiate a litigation action
subject to all of the terms and conditions of this Sublease.

     


    
      
         


      

      
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    19. Responsibilities to
Sublandlord.  Notwithstanding anything in this Sub-sublease to
the contrary, nothing herein shall relieve FCC of its responsibilities to
Sublandlord, or Sublandlord of its responsibilities to Landlord and the
responsibilities derived from the Master Lease.

     

    20. Obligation to Provide
Services.  FC Products acknowledges and agrees that FCC has no
obligation to provide services to be provided by Landlord or Sublandlord under
the Sublease or the Master Lease.  Notwithstanding the foregoing, FCC
shall use commercially reasonable efforts to ensure that all parties are
complying with their obligations under the Sublease and the Master Lease, and
that all services reasonably necessary to the operation of FC Products’ business
in the Sub-subleased Premises are timely provided.

     

    21. Reduction in Base
Rent.  FC Products acknowledges that it is receiving a
reduction in Base Rent, as shown on the attached Exhibit
D.  If FC Products surrenders any portion of the Sub-subleased
Premises, any reduction in Base Rent which would otherwise be attributable to a
reduction in space leased shall be postponed until such time as Sublandlord and
FCC have recouped the entire subsidy granted prior to the date of
surrender.

     

    22. Limitation of FCC’s
Liability.  If FCC, on the one hand, or FC Products, on the
other (in either case, the “Liable Party”), is held or found to be liable to FC
Products, on the one hand, or FCC, on the other (the “Recipient Party”), for any
claim, liability, loss or expense (a “Loss”) relating to or arising from a
breach of any representation or warranty contained in this Sub-sublease, whether
based on an action or claim in contract, negligence, tort or otherwise, the
amount of damages recoverable for such Loss by the Recipient Party from the
Liable Party will not exceed $3,200,000 minus the sum of (A) the aggregate
amount of Losses arising under this Sub-sublease and paid by the Liable Party to
the Recipient Party, and (B) the aggregate amount of any liabilities for damages
arising from a breach of any representation or warranty contained in any
Transaction Agreement paid by the Liable Party to the Recipient
Party.  “Transaction Agreements” means the Purchase Agreement and the
Ancillary Agreements identified in the Purchase Agreement.

     

    23. Parking.  FC
Products shall have the non-exclusive right to use a proportionate share of the
number of parking spaces serving the Premises equal to FC Products’
Proportionate Share of the parking made available to FCC.

     

    24. Counterparts.  This
Sub-sublease may be executed in multiple counterparts, and such counterparts,
when taken together, shall constitute a complete agreement.

     

     

     

    {Signatures
follow on next page.}

     


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    FCC and FC Products are signing
this Sub-sublease as of the date set forth in the introductory
clause.

     

     

    
      	
              FRANKLIN
      COVEY CO.

               

                    /s/
      Robert A. Whitman

            	 
      	
              FRANKLIN
      COVEY PRODUCTS, LLC

               

                    /s/
      Sarah Merz

            
	
              By:

            	 
      Robert A. Whitman	 
      	
              By:

            	 
      Sarah Merz
	
              Its:

            	 
      Chairman and Chief Executive Officer	 
      	
              Its:

            	 
      Chief Executive Officer and President